How I Paid off $35k in Four Years

It’s the little things in life that add up. Sometimes those little things are printed on receipts, and they add and add, until one day a molehill of receipts turns into a mountain of debt.

Caroline Colasurdo was 33-years-old with two bachelor’s degrees, a steady job and $35k in credit card debt. Ten years of flying coast-to-coast visiting friends and family, a new wardrobe for a job and a few too many nights out, added up.

To Caroline, it wasn’t anything catastrophic. Life sometimes goes at a different speed than your finances, and now she was playing the catch-up game.

“There was a moment in my thirties when I said, ‘yeah, I had a lot of fun in my twenties, but now it’s time to do something about it.’ ”

The problem with playing catch-up is that the cost of those little purchases begins to multiply with interest. Paying them off is like trying to hit a moving target. The interest charged on the account piles on more debt and your payment barely moves the needle on the balance owed.

A couple of friends told Caroline about InCharge Debt Solutions, and how the company had eliminated their debt. She called them up, a credit counselor gave her a full evaluation right then and there, and four years later, she was debt free.

Lower interest rates equal more manageable debt

InCharge consolidated her debts into one monthly payment designed to tackle debt in the quickest, most efficient way. It’s called a Debt Management Plan. Caroline paid InCharge an equal amount every month, and they distributed the money to her creditors.

The key in a Debt Management Plan is that InCharge is able to work with creditors to reduce interest rates to a reasonable number. Those monthly payments finally reduced the balance owed.

“When I saw the list that Incharge had given me as far as what my current interest rate was and what they were able to get them down to, my jaw hit the floor,” Colasurdo said.

Fresh out of college, Caroline needed a $3,000 dental procedure. Her entry level job didn’t have health benefits, and no college grad has that kind of cash lying around. The dentist offered her an in-house credit card as a way to finance the procedure. Caroline had great credit, but the company charges a 22% flat interest rate regardless of credit scores. Years later, InCharge was able to whittle that down to 6% through the debt management plan.

If you calculate interest over the course of four years — the time it took Caroline to pay off her debts — the original rate would have accumulated $4,175 in interest alone. The rate InCharge obtained totaled $811.

Switching from credit to cash

Part of the calculus that goes into debt elimination is that existing credit lines need to be closed. You can’t get out of debt if you are constantly adding to it. The best way to do that is to phase out use of credit cards. You can keep a low-limit card for emergencies, but all other transactions should be handled with cash. For Caroline, having the cash in hand made her think twice about what she was buying.

“It was a huge shift going from swiping a credit card to completely (paying with) cash,” she said. It was so easy with a credit card. Let me just run out and do some grocery shopping, pick up some things from the store, and its $200. You do that every couple of weeks, and it just really racks up. I had to change my mentality and think: ‘Do I need this? Or do I want this?”

Closing credit accounts typically has a negative effect on credit scores, but the score rebounds quickly as you benefit from regular, on-time payments and your debt-to-income ratio dwindles. Caroline’s credit score never dipped below 700. When an accident forced her to buy a new car a year and a half into the program and she had to take out a car loan, she was “shocked” to see her credit score was so high.

Customer service goes above and beyond

Above all, it was the customer service that Caroline appreciated the most. When her pay period was off a couple of days, InCharge had no problem accommodating that.

“I had to deal with customer service with all the credit cards I had, and student loans. Their customer service was absolutely the best,” Colasurdo said. “They were extremely knowledgeable and actually went out of their way to provide additional information above and beyond what I had initially called about.”

Now the debt is behind her, and it’s on to better days. “Instead of worrying about debt, now, I’m able to put that money towards things that are increasing my personal quality of life,” she said.